3.9 Budgets questions for IB Business Management

Lundqvist Office Supplies is a wholesaler in Gothenburg, Sweden. Each autumn its sales manager, Elin Lundqvist, prepares a sales forecast for the next year. The finance team then uses it to set the sales revenue budget for each of the company’s three regional sales teams.

Distinguish between a sales forecast and a sales revenue budget for Lundqvist Office Supplies.

De Wilgenhoeve (DW)

Read the resources and answer the questions that follow.

De Wilgenhoeve (DW) is a care farm* near Utrecht, the Netherlands, run as a social enterprise since 2012 by Marieke and Joost van Dijk. Each weekday it welcomes about 45 participants – adults with intellectual disabilities and older people with early dementia – who feed the goats, work in the vegetable garden, help make goat’s cheese and serve in the farm shop. The local municipality pays DW a fixed amount for each day a participant attends. DW employs 16 care staff and farm workers and is helped by 20 volunteers. It is organized into three cost and profit centres: care, cheese-making and the farm shop.

* care farm: a working farm that provides day activities and care for people who need support.

Image: an older man in a wool cap and a young woman with Down syndrome laugh as they bottle-feed two baby goats in a straw-filled barn. A wooden sign above the door: “De Wilgenhoeve – zorg met hart en handen” (care with heart and hands).

Resource 1 – News article from the *Utrecht Regional Courier*

Care farms caught between rising costs and municipal cuts

Municipalities across the Netherlands are cutting the daily rates they pay for day care as their own budgets shrink. Care farms say their costs – especially wages and energy – are rising fast. “Participants love the farm,” says Marieke van Dijk, “but love does not pay the electricity bill.”

Resource 2 – Social media posts from Ingrid, whose father attends DW

Since Papa started going to De Wilgenhoeve three days a week he sleeps better, eats better and talks about “his” goats all evening. The staff know exactly how to calm him when he gets confused. [1/2]

The municipality only pays for three days, but he asks every morning if it is a farm day. We would happily pay for a fourth day ourselves if the farm offered it. [2/2]

Resource 3 – Letter from the municipality to DW

From 1 January 2027 the daily rate for day activities will fall from €78 to €70 per participant per day. Providers must keep a ratio of at least one qualified carer for every five participants and report quarterly on attendance and quality. The municipality will not increase the number of funded places.

Resource 4 – DW’s budget and actual results for 2026 (€000)

Table 1: Budget and actual results, 2026

Resource 5 – Internal email from Joost van Dijk to Marieke van Dijk

From: Joost van Dijk

To: Marieke van Dijk

Subject: What do we do about 2027?

If attendance stays at 10 800 days and costs stay as they were this year, the new rate means a deficit. Ideas:

1. Expand cheese-making: a new cheese room (€80 000) would let us sell about €150 000 more cheese a year to restaurants and shops in Utrecht. Cheese earns a contribution of about 45 % of sales, and participants enjoy the work.

2. Private-pay days: 14 families on our waiting list (and families like Ingrid’s) would pay €85 a day for extra days not funded by the municipality.

3. Solar panels for the barns and cheese room: €60 000, saving about €20 000 a year in energy.

4. More volunteers instead of paid staff – but the 1:5 ratio rule applies to qualified carers.

I am worried that private-pay days would create a two-tier farm, where richer families get more care.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 6 – Survey of participants’ families (38 replies)

Nueva Era Gym

Nueva Era Gym (NEG) is a gym in Monterrey, Mexico, owned by Valeria Garza. Members pay a monthly fee of MXN 900. Each December Valeria forecasts the number of members for each quarter of the following year. Her forecast becomes NEG’s sales revenue budget, which is also used to set targets and bonuses for the three membership sales staff.

For 2025 Valeria forecast that membership would grow from 1 000 in the first quarter to 1 300 in the fourth quarter, after NEG introduced new spinning classes. In July 2025 a national budget gym chain opened a branch two streets away, charging MXN 450 a month. Table 1 shows NEG’s budgeted and actual sales revenue for 2025.

Table 1: NEG’s budgeted and actual sales revenue, 2025 (MXN 000)

Kumarakom Backwater Resort, in Kerala, India, has three departments: rooms, restaurant and spa. Its overheads (management salaries, security, insurance and marketing) of ₹9 600 000 a year are allocated to departments according to the number of staff in each.

Table 1: Departmental data for the year (₹ million)

Habi Threads

Habi Threads (HT) is a clothing retailer in Metro Manila, the Philippines, that sells shirts and dresses made from traditional handwoven fabrics. It has four stores, each run as a profit centre by a store manager. Head-office overheads of PHP 6 600 000 a year (design team, buying, accounts and marketing) are shared between the stores in proportion to their revenue.

Store D, in a shopping mall in Quezon City, opened in 2023 and shows a loss. HT’s chief executive, Arnel Dimaculangan, wants to close it. Store D’s manager, Teresa Dizon, says the store is still building its customer base and that many online orders come from customers who first saw HT’s clothes there.

Table 1: Store results for 2025 (PHP 000)

Store fixed costs would end if a store closed. Head-office overheads would not change.

Snelfiets BV

Snelfiets BV (SF) is a private limited company in Utrecht, the Netherlands, that delivers parcels and restaurant meals by cargo bike. It employs 60 riders and has a hub near the central station. In 2025 SF appointed a new general manager, Femke de Vries, who set the budget for the year herself, based on the previous year’s figures plus a target for growth. Riders were not consulted.

During 2025 several experienced riders left for a competitor, and SF paid existing riders overtime to cover their shifts. New riders needed training and damaged more bikes. One large corporate client did not renew its contract. SF’s budget and actual results for 2025 are shown in Table 1.

Table 1: SF’s budget and actual results for 2025 (all figures in €000)